The UK government plans to give the Bank of England a secondary objective to support innovation in systemic payment systems, including systems that use stablecoins and other digital settlement assets.
HM Treasury announced the proposal on August 27. It said the new responsibility would remain subordinate to the Bank’s primary financial-stability objective and would not require support for an innovation that could undermine stability.
The legal distinction is important for payments companies: this is a proposed change to the central bank’s regulatory remit, not approval of a stablecoin, payment network or business model. The government expects to implement it through amendments to the Financial Services and Markets Bill, with further House of Lords debate scheduled for September 7 and 9.
A focused mandate for systemic infrastructure
The Bank supervises critical financial-market infrastructure, including systemic payment systems, central counterparties and central securities depositories. It already has a secondary innovation objective when regulating central counterparties and central securities depositories under the Financial Services and Markets Act 2023. The proposed reform would extend that approach to systemic payment systems.
That perimeter is narrower than the payments market as a whole. The announcement does not place every wallet, processor, merchant acquirer or fintech directly under a new Bank of England objective. Its immediate significance lies in how the Bank weighs innovation when supervising payment infrastructure whose disruption could threaten financial stability.
HM Treasury explicitly included payment systems that use digital settlement assets, such as stablecoins. That brings token-based settlement within the proposal’s scope, but it does not change the regulatory status of any issuer or imply that a stablecoin has entered production use.
Annual reporting creates an accountability channel
The Bank would report annually to Parliament on how it is advancing the innovation objective. For infrastructure operators and payment firms, that reporting could become a practical signal of how the regulator assesses new settlement models while preserving resilience.
The announcement does not specify performance measures. Useful reporting would distinguish research and sandbox work from production deployment, and explain how the Bank evaluates interoperability, operational resilience, liquidity, redemption and concentration risks. Those are analytical benchmarks rather than requirements announced by the government.
City Minister Lucy Rigby said tokenisation and distributed-ledger technology have the potential to transform financial markets. Sarah Breeden, the Bank’s deputy governor for financial stability, welcomed the proposal and said it would support innovation without compromising stability.
What payments firms should watch next
The next concrete step is legislative. Until Parliament approves and the relevant provision takes effect, the objective remains a government proposal. The eventual statutory wording will determine the precise duty, while later Bank reporting will show how the objective influences supervision in practice.
For stablecoin and payment-infrastructure providers, the key issue is not whether innovation has been endorsed in the abstract. It is whether the new accountability framework produces clearer, evidence-based explanations of how novel settlement designs can meet the safety standards applied to systemic infrastructure.